How should affordability be measured?

Housing affordability is widely recognised as one of the most important issues facing households today. However, before we can assess the extent of the problem or propose solutions, we need to be clear how affordability should be measured. Perhaps the most important principle is that any metric needs to be relevant to, and reflect the circumstances of, groups widely thought to experience affordability problems, particularly low-income households and first-time buyers. Therefore, the measure should capture the distribution of outcomes across households rather than concentrating simply on averages; rising house prices, for example, have different effects on different groups. This paper critically examines the measures of affordability most commonly employed internationally, before proposing two modifications: one for low income renters and one for potential first-time buyers.

Author(s): Geoffrey Mean
Published: 03 September 2018
Categorised in: Affordable housing
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